TLDR: It takes money to raise money, and you’ll be lucky if more than 75% of your donation goes directly to a nonprofit’s mission. At Benefact, we deliver more than 90% of all of our donations directly to a nonprofit’s mission.
When donating to a nonprofit, you have to ask yourself the question: How much money is the nonprofit spending to get my donation? For example, if the nonprofit spends, on average, $0.30 to raise every dollar, then only $0.70 of your donation will be flowing to the nonprofit’s non-fundraising activities (e.g., it’s actual mission). This measure can be quantified by the “Fundraising Expense Ratio” (FER) which is the amount of money a nonprofit spends on fundraising activities divided by the total amount of money it has raised. In the example above, the nonprofit has a FER of 0.30, since it spends $0.30 to raise every dollar.
So what is an “acceptable” or “good” FER? The Association of Fundraising Professionals (AFP) states that 0.15 is generally accepted as the “expected average”, but that this can vary based on the size of the nonprofit and its mission. The Urban Institute and Indiana University measured the real FERs of 56,000 nonprofits based on Form 990 filings, and the average FER across all of these nonprofits was 0.18 (see graph below).
So the average nonprofit spends about $0.18 to raise every dollar. The bottom line: It costs money to raise money. Nonprofits spend money on staff members and various fundraising activities, such as 5Ks, bingo nights, parades, pop-up fundraisers, bake sales, and more.
Benefact Delivers >90% of Donations to Nonprofits
At Benefact, over 90% of the donations to our fundraisers will be delivered directly to a nonprofit. In other words, a nonprofit will not expend more than $0.10 for every dollar raised through Benefact. And better yet — nonprofits do not have to pay anything upfront to partner with Benefact, so our partnership model is zero-risk. If you came to this article from one of our fundraisers, rest assured and donate! Your donation will be put to good use. If you’re a nonprofit thinking about partnering with Benefact, there’s no risk to do so, so feel free to reach out Richard Ling, one of our co-founders, at richard@benefact.co.
